Cryptocurrency: Maria Bekiaris Four-step guide to buying bitcoin

So you’re thinking about investing in bitcoin but how do you actually do it?

Set up a digital wallet

The first step before buying any crypto-currency is to set up a digital wallet. This will be a relatively secure place to store your bitcoin and also is the “address” you need to provide when you’re buying and selling cryptocurrency. Although providers may be able to store your bitcoin on their exchange, it is recommended that you transfer your bitcoins to your own personal wallet as that will probably be more secure.

There are a number of different types of wallets. There are software wallets that you can install and download onto your desktop or online wallets, which are essentially browser based, or you could get one for your mobile. Popular wallets include Bitcoin Core, Xapo and Mycelium. (See bitcoin.org/en/wallets/ mobile/android for a longer list.)

For larger amounts you may opt for a “hardware” wallet such as Trezor or KeepKey, where you can store your info on a USB. They are safer because even though you can transact online, they are stored offline, making it harder to hack.

Choose a trading platform

You’ll need to set up an account with a trading platform that will let you buy and sell cryptocurrencies.

When shopping around for a trading platform make sure you compare the fees, as there can be a big difference between sites. You should also take into account the exchange rate. Some will let you trade in Aussie dollars, which you might find useful if you don’t want to worry about the conversion rates, but buying and selling in US dollars is more common.

It’s also a good idea to make sure there’s plenty of volume on your chosen trading platform to minimise possible liquidity issues if you want to sell.

BTC Markets is the biggest exchange in Australia and lets you buy in Aussie dollars. Other exchanges include CoinJar, BitcoinAustralia, CoinSpot and CoinLoft. You’ll probably be asked for proof of identification such as a driver’s licence, passport or proof of age card.

Fund your account

After you have set up an account with your chosen platform and have gone through the verification process, you’ll need to add funds to your account so that you can make a purchase. Depending on the provider, you might be able to make a direct electronic transfer, pay using POLi or make a cash deposit at a bank branch.

Make a purchase

You have your digital wallet, have opened a trading account and have deposited cash; now the only thing left to do is to make your purchase. At the time of writing, one bitcoin would set you back $4787 but you don’t have to buy a whole bitcoin – you can buy a fraction. The smallest amount will vary between platforms. CoinTree, for example, says it accepts purchases of $200 or more while Bit Trade Australia has a minimum order size of $50. It is a good idea to start small.